Making sense of Toyota: Lexus, Scion, Denso, and others

Before we get to the chaotic world of Fiat Chrysler, let’s look at the largely stable universe of Toyota, one of the world’s largest automakers.

Toyota was created as a side project by an automated-loom company; the spelling was changed from the founder’s name, Toyoda, to Toyota to get a luckier number of brush-strokes when writing it. The company is headquartered in Japan, but has long had a strategy of local HQs to customize cars, packages, and marketing to regional needs.

For an outfit that prefers to grow organically, Toyota has a large number of brands. There’s the standard Toyota, which has a range of cars and trucks; most of the cars have long been comfort-biased, in opposition to Honda’s mild performance bias. Between the two companies, most potential buyers would find something they liked, for many ears. That is changing now, with the performance-oriented, yet still comfortable, TNGA-based cars. (Some would say it’s about time, since recent Corolla and Camry generations were less than stellar.)

The company created Lexus as a North American brand solely for its luxury cars, when those failed to gain traction in the USA as Toyotas. At the same time, engineers created a vehicle that was far more luxurious than anything Toyota had made before — and, arguably, anything Mercedes had made, either. Lexus quickly soared in popularity, though counter-strokes by German automakers and errors on Lexus’ part eventually cut share. Lexus remains the most successful luxury marque of any Japanese company, by just about any measure, using a general formula of “comfort first, with high straight-line performance.” Its SUVs and trucks have tended to be less well-modified than its cars, and the IS series emphasized sportiness above comfort, diluting the brand messaging somewhat. (Lexus is currently a global brand.)

Scion was created when Toyota realized its strategy left many younger buyers in the cold. The goal was to modify the cheapest Toyota sold in America, with various body styles aimed at young buyers. The strategy did not work particularly well, as older buyers liked the new cars; there was some success, and the original nontraditional marketing seemed to work, but in the end the brand ended up like Saturn. An initial flush of success gave way to business as usual, and Toyota wrapped Scion back into itself.

Now, there was a new strategy for attracting younger buyers, one which made more sense — remaking the Toyota brand. Just as Dodge had gained the youngest average buyer in America by changing its cars, Toyota created a platform and architecture, TNGA, which made the Corolla, RAV4, Avalon, and Camry more engaging to drive, while increasing comfort and cornering performance.

Toyota also owns all of Daihatsu, which it purchased in 2016; the company makes engines, small cars, and off-road vehicles. The company also developed its own hybrid technology and electric cars, which may have been Toyota’s main goal in the purchase.

Then there’s Hino Motors, which makes diesel engines and commercial vehicles; Americans have seen numerous Hino trucks on the streets, as have Russians, Israelis, and many others. Toyota bought half of the company back in 1967, which is when they stopped making passenger cars and focused entirely on commercial vehicles and engines. Hino had started making cars before Toyota, with its first truck coming in 1917.

Toyota created Denso, formerly Nippon-Denso, the second largest auto parts supplier in the world. Denso builds and sells globally, and is essential for many companies’ hybrid systems. Denso was spun off from Toyota in 1949; Toyota likely sold off three quarters of the company (ending up with 25% of the stock) to make it easier for other automakers to justify relying on Denso parts. (Denso itself is a contraction of “electric equipment.”)

Toyota also owns 23% of transmission maker Aisin, which supplies Ram and commercial trucks, among others; 17% of Subaru, resulting in a jointly developed sports car; 6% of Isuzu, reportedly the price of using that company’s extremely high-performance diesel emissions systems; and 23% of Noble Automotive, a small British sports-car maker. That share may have been purchased to get expertise for Toyota racing efforts.

In short, Toyota is much larger and more complicated than it seems from the outside; it’s to their credit that Toyota has remained with three major, separate brands in North America (now that Scion is gone).